The scorecard, which focuses on the core ASEAN countries of Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, assesses publicly listed companies (PLCs) in five categories: rights of shareholders; equitable treatment of shareholders; role of stakeholders; disclosure and transparency; and responsibilities of the board, using principles identified by the Organization for Economic Cooperation and Development.
“Right now, if the results were published today, no Philippine company would make it to the ASEAN top 50,” Institute of Corporate Directors (ICD) President and Chief Executive Officer Ricardo Nicanor N. Jacinto told BusinessWorld in an interview.
He said regulators like the Philippine Stock Exchange (PSE) and the Securities and Exchange Commission (SEC), as well as the companies, have been “moving heaven and earth” to improve the scores before they are publicized next year, with the hopes that at least 15 to 20 PLCs would make it to the top 50.
“The SEC has realized that Philippine companies cannot comply with everything that the scorecard asks for overnight, so it gave the companies three years to sort of get their acts together, before their individual scores are announced,” the domestic ranking body’s chief said.
He said they made a deal with companies that they will not disclose their individual scores while they are undergoing the so-called “test phase.”
“But next year is the end of the practice period and that’s the time when the individual scores of these top 100 will be released together with the rest of ASEAN. So it will be out there for everybody to see how Philippine companies rate vis-à-vis their ASEAN peers,” he said.
Mr. Jacinto noted that countries with the best chance of making it to the top -- such as Singapore, Malaysia and Thailand -- have had a “head start” and had been working on their scores since 2010.
“It’s going to be a battle… Believe me, (other ASEAN countries) are going to work hard to be in there. So it’s going to be a real fight for Philippine companies,” Mr. Jacinto said.
He noted that the SEC tapped the ICD in 2012, and they have been “scrambling” since then to catch up.
“I think the head start is big but not insurmountable,” Mr. Jacinto said.
PSE President and Chief Executive Officer Hans B. Sicat told BusinessWorld in a separate interview: “When companies go public, we actually run them through some requirements, that’s an educational process. And every year, we have an update seminar for CIOs (chief information officers) -- the people responsible for sending the information. And we’re trying to spearhead a new investor relations exercise for companies.”
Mr. Jacinto said the SEC has been issuing several circulars to help Philippine companies to improve their standing, including those that require them to make a habit of publishing corporate governance practices on their respective Web sites.
“ICD is also conducting public workshops with individual corporations to help improve their scores. And we’ve seen that a lot of the companies are very, very enthusiastic and committed to this,” Mr. Jacinto said.
On the other hand, the PSE chief also noted an improvement in the scores of Philippine companies from when the scorecard was first launched in 2011.
“On average, most of the companies that have been reviewed and surveyed, they’re scoring higher today. In other words, they’re probably better than before, they’re probably more aware of the different categories and what to explain, so there’s a better appreciation of the scorecard and people are moving up on the qualitative scale,” Mr. Sicat said.
Released in June, the 2013-2014 ASEAN scorecard showed that corporate governance has improved significantly among the country’s top 94 public companies in terms of market capitalization, but the overall score dipped for all listed firms.
Using data provided by 252 listed firms as of end-June last year, the Asian Development Bank-backed report revealed that average corporate governance score for the top 94 have risen to 58 last year from 48.91 in 2012.
For all 252 companies, however, this dipped to 51.1 points from 53.8.
A perfect score, based on the two-step methodology used, is 142.
The Philippines saw its scores improve in four categories, particularly in regard to the role of stakeholders (4.85 from 2.80), disclosure and transparency (16.03 from 13.58) and responsibilities of the board (19.71 from 16.36).
Shareholder treatment rose marginally to 11.06 from 10.71, while rights of shareholders dipped to 5.55 from 5.60.
Areas for improvement were cited, and overall the report said “part of the reason” for the low scores of local PLCs is “the lack of adequate disclosures compared to their counterparts in other ASEAN countries…”
“There is a perception that potential investors have difficulty navigating mainly due to the variety of formats and content employed from company to company,” it added.
The Philippine score of 58 compares to Indonesia’s 54.55, Malaysia’s 71.69, Singapore’s 71.7, Thailand’s 75.39 and Vietnam’s 33.9.
“We are a big supporter and partner of the SEC in terms of the ASEAN scorecard so we’re also trying to spread the word on what is it about, and what’s the difference exactly between the old, individual, in-country scorecard and the ASEAN,” Mr. Sicat said.
Mr. Jacinto, for his part, said: “I think as long as the SEC and the companies work together with us -- and we’re there to help them in any way that we can -- I’m pretty sure we’ll improve. There’s no way to go but up with regards to the top 50.”
He added that they are optimistic that Philippine PLCs will be able to break into the top 50 by November next year.
“We’d be hosting APEC (Asia-Pacific Economic Cooperation) forum and medyo embarrassing if we don’t crack the top 50,” the ICD chief said.
source: Businessworld
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